One of the biggest discount retailers in the Washington area -- will go out of business in mid-January, throwing 2,000 local employes out of work.
All 13 Memco stores in Maryland and Virginia will be closed as part of a surprise retrenchment announced yesterday by Lucky Stores Inc., the California supermarket chain that owns Memco.
Memco officials said the stores will be closed Jan. 15, the employes terminated and the merchandise sold to a liquidation firm that will sell it off.
The store buildings will be taken over by Bradlees, a rapidly-growing Massachusetts discount chain, which said it plans to remodel the stores and reopen them next summer. Bradlees reportedly plans to tear out the supermarket sections of the Memco stores and turn the buildings into general merchandise discount stores similar to K marts. Without food departments, the stores will require substantially fewer employes.
The Memco closings were announced just as the 14 Washington-area Woolco stores began the final stage of going-out-of-business sales before they close early next year.
On top of the 1,000 Woolco workers who will lose their jobs, the Memco shutdown will leave hundreds more retail clerks looking for work at a time when most stores are laying off employes after the Christmas rush.
"It's going to be hard to find jobs with all those Woolco and Memco employes looking," said Thomas McNutt, president of Local 400 of the United Food and Commercial Workers Union. McNutt said his local had been holding talks on a new union contract with Memco and "those bastards didn't tell us what they were doing."
Memco executives and union officials are scheduled to meet next week to discuss what will happen to the stores' workers. The company spokesman said employes will be eligible for termination pay based on length of service.
Union officials accused the company of ignoring provisions of the local supermarket union contract that require 30-days advance notice of store closings. They said Bradlees has indicated it has no plans to offer Memco workers the first opportunity to be hired for jobs in its stores.
Memco executives flew into Washington over the Christmas weekend with an elaborately detailed, surprise plan for shutting down the stores. The announcement was delivered to the union and the news media yesterday morning and disclosed to employes at afternoon staff meetings.
The decision to close down the Memco operation was a shock, because the Memco units in Columbia and Greenbelt opened their doors only two months ago.
The Washington-area Memco stores are the only East Coast operations of Lucky Stores Inc., which runs Lucky supermarkets and Gemco discount stores in California, Arizona, Nevada and Texas. Lucky Stores closed down an unprofitable restaurant chain earlier this year and had been tightening its overall operations, said Terence McEvoy, an investment analyst who follows the company for Dean Witter Reynolds.
McEvoy said Lucky Stores apparently decided it was better off selling the Memco properties to Bradlees than trying to improve the stores' profitability. "They saw a chance to get out without a loss and with maybe a little profit and they took it," he added.
Memco and Bradlees executives began talking only a month ago about the stores, executives of the two chains confirmed. Bradlees opened five stores in southern Virginia earlier this year and had earlier considered buying some of the Woolco stores as a way of getting into the Washington market.
The closing of Memco was "a decision based on the fact that we have been marginally profitable in the 12 years we have operated" in the Washington-Baltimore market, said James Koerlin, the Memco executive in charge of the shutdown.
Citing "logistical reasons" Koerlin said, "we just didn't have the store base" to operate a business 3,000 miles away from the company headquarters in Dublin, Calif. Koerlin would not disclose Memco sales figures, but the Lucky discount stores are estimated to average more than $20 million a year in general merchandise sales, according to the industry newspaper Discount Store News.